Non-compete agreements have been a source of controversy in recent years. Some states, including California, have completely prohibited them in employment contracts. The Federal Trade Commission (FTC) also attempted to do so just a few years ago, only to have the federal courts strike down that new final rule.
After so many changes to the law, companies in Pennsylvania may be unsure about whether they can add non-compete agreements to new employment contracts or enforce agreements signed with workers years ago. Are employment contract non-compete agreements still valid and enforceable in Pennsylvania?
Yes, many non-computes are still valid
Theoretically, businesses can enforce non-compete agreements against former employees in Pennsylvania. Doing so generally requires litigation. The business must first prove that the contract signed is valid and enforceable and must also show that the worker has violated the agreement.
Requiring that workers sign a contract with a restrictive covenant, such as a non-compete agreement, typically imposes an obligation on the employer to offer something of valuable consideration in exchange. The terms of the non-compete agreement must also be reasonable. Generally speaking, the restrictions cannot persist indefinitely and typically may only apply to a specific geographic area.
If the contract is valid and a breach has occurred, the courts can offer appropriate remedies. Enforcement efforts can lead to a court-ordered injunction preventing workers from unfairly competing against their former employers or even an award of damages based on provable economic harm or the terms included in the original contract.
Employers who are aware that former employees have taken jobs with competitors or started competing businesses may need help assessing their circumstances effectively. Reviewing a contract with a skilled legal team can help business leaders determine if litigation to enforce a contract is necessary.